SOLUTION

ASSIGNMENT 2
(a)

1) Units completed
Opening work in progress 800
Units introduced during period 1620
Total input for period 2420
Less: Closing work in progress (500)
Balance - Completed productions 1920

Process - Weighted average method (cost per unit)

Current Complete WIP Total Cost
Opening WIP Total cost
cost d equivalent equivalent per
Cost element
unit
(RM) (RM) (RM) units units units
(RM)
Materials 98 000 386 000 484 000 1 920 500 2 420 200
Labour 46 000 276 320 322 320 1 920 450 2 370 136
Production
7 600 149 280 156 880 1 920 200 2 120 74
overheads
151 600 963 200 410

b) The difference in assigning costs to units completed and closing work in progress
between weighted average and FIFO method

In weighted average, the current period cost will include the cost of finishing off the
opening work in progress. The cost of work in progress will be included in the total
cost. Materials will not be added to the closing work in progress and the equivalent
production will be zero. It is necessary to add the opening work in progress cost to the
current cost. The equivalent production of opening work in progress is ignored since
this is included as being fully complete in the completed unit’s column.
In FIFO, the opening work in progress is charged separately to completed
production. The cost per unit for the current period is based only on the current period
costs and production for the current period. The closing work in progress is assumed to
come from the new units started during the period. The closing work in progress
includes only the current cost and does not include any of the opening work in progress,
which is carried forward from the previous period.